Solar Yieldcos – the future of solar finance?

Mike Rand, Managing Partner Bluefield Partners LLP Solar Energy UK, 2014

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Snapshot of Bluefield Partners

From this... ...to this • Invested gross assets of over £180m in the last 15 months in 25 solar sites • Established and advise the £150m market cap. Bluefield Solar Income Fund (BSIF),

the first LSE listed solar investment company

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Renewable Energy Yieldco’s on LSE

No LSE listed renewable energy investment trusts

UKW IPO for £260m (UK wind portfolio)

BSIF IPO for £130m (construction of UK solar portfolio) TRIG IPO for £300m (UK and European wind and solar portfolio)

FSFL IPO for £150m (acquires operational UK solar)

BSIF/TRIG/UKW further issues JLEN IPO for £160m (acquires renewable and environmental infra) NESF IPO for £85.6m (acquires operational UK solar)

BSIF/UKW/FSFL/NESF announce placement programmes up to c.£1bln

Jan 13

Mar 13

Jun 13

Sep 13

Dec 13

Mar 14

Jun 14

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Similar Trends in N.America

Date Fund Amount Focus

July 2013 NRG Yield $495m Gas, Solar, Wind

July 2013 Brookfield $500m Hydro, wind, gas

Oct 2013 Pattern Energy $320m Wind

Aug 2013 Trans Alta RE $200m Wind, hydro

June 2014 Abengoa $800m RE/Conventional/Transmission

July 2014 Next Era $495m Solar, wind

July 2014 SunEdison $500m Solar

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Why Yieldcos?

• Low correlation • Attractive yields

BSIF vs FTSE100

UK Equity Income Funds

PPP Funds

Core Infra.

UK Utilities

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

5.0 10.0 15.0 20.0

Yiel

d %

Price volatility over 5 years %

Price volatility & yield vs other asset classes

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Renewables Bubble or History Repeating?

Growth of listed infrastructure market (£m)

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2006 2007 2008 2009 2010 2011 2012 2013 2014

HICL INPP 3IN JLIF GCP BBGI

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RE Listed Yieldco Risk & Return

•Solar Funds target 1% discount in IRR versus wind

•All solar funds have same IRR targets

•Different funding approaches – construction / operational / accredited

Geography Asset Type Target return

Target yield UK France Other

Europe Solar Water/ waste Wind

Bluefield Solar Income 7-9% 7% 100 n/a n/a 100 n/a n/a

Foresight Solar 7-8% 6% 100 n/a n/a 100 n/a n/a

John Laing Environmental 7.5-8.5% 6% 100 n/a n/a 26 37 38

NextEnergy Solar 7-9% 6.25% 100 n/a n/a 100 n/a n/a

Renewables InfraGroup 8-9% 6% 84 14 2 24 n/a 76

Greencoat UKWind 8-9% 6% 100 n/a n/a n/a n/a 100

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Bluefield financing model for sustainability of UK solar 1

1. Construction funding: matching our cash with the industry’s expertise eliminating extraction of excessive

rents by funding intermediaries

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Bluefield financing model for sustainability of UK solar 2

2. Scale & Liquidity Represent the sector to the City by delivering on promises to achieve scale and liquidity for yield compression

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Bluefield financing model for sustainability of UK solar 3

Fund fee base declines rapidly with scale:

£200m

£100m

£300m

1% 0.8%

0.6%

3. Control costs

Bluefield captive development pipeline:

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Solar Yieldco: Bubble or Beginning??

Listed solar yieldcos have the potential to follow or exceed the PFI sector growth path by attracting low cost long term capital to the solar sector.....

..... But only if this emergent sector delivers on our promises by offering Investors transparency and value for money

Bluefield intends to lead the sector from

‘bubble’ into sustainable growth by doing exactly that.